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ROADSHOW LONDON // KeplerCheuvreux
HUGO BOSS Company Handout
London, May 13, 2015
Mark Langer, CFO I Dennis Weber, Head of Investor Relations
Roadshow London // KeplerCheuvreux
HUGO BOSS ©
May 13, 2015
2
Agenda
Financial Review First Quarter 2015
Strategic Outlook 2015
Financial Outlook 2015
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HUGO BOSS ©
May 13, 2015
3
Agenda
Financial Review First Quarter 2015
Strategic Outlook 2015
Financial Outlook 2015
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HUGO BOSS ©
May 13, 2015
4
HUGO BOSS grows top line whereas operating profit remains stable
Sales
EBITDA before special items
(in EUR million)
(in EUR million)
+9%
0%
668
131
132
Q1 2015
Q1 2014
Q1 2015
613
Q1 2014
(+3% fx-adjusted)
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HUGO BOSS ©
May 13, 2015
5
All three regions contribute to Group sales growth
Sales growth by region, y-o-y
in EUR
Q1 2015
(in %)
fx-adjusted
4
Europe*
3
21
Americas
2
17
Asia/Pacific
1
9
Group
3
0
■
■
■
4
8
12
16
20
24
UK and Germany strongest growing major markets in Europe
US market up 4% currency-adjusted, exceeding overall growth in the Americas
Australia and Japan drive growth in Asia/Pacific, sales in China decline 3% currency-adjusted
*Incl. Middle East and Africa
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HUGO BOSS ©
May 13, 2015
6
Like-for-like growth acceleration drives solid retail sales development
Sales growth by channel, y-o-y
in EUR
Q1 2015
(in %)
fx-adjusted
15
Retail
6
2
Wholesale
(2)
6
Licenses
6
9
Group
3
(5)
■
■
■
0
5
10
15
Improved comp store sales growth of 3% contributes to retail sales increase
Cautious ordering and takeover effects impact wholesale performance
Eyewear and watches support strong development of license business
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HUGO BOSS ©
May 13, 2015
7
Gross profit margin improves moderately
Gross profit margin
(in %)
■
■
■
+10bp
65.4
65.5
Q1 2014
Q1 2015
Tough comparison base
Positive distribution channel mix partly offset by negative inventory valuation effects
Neutral impact from rebate management
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HUGO BOSS ©
May 13, 2015
8
Group EBITDA remains stable compared to the prior year
in EUR million
Q1 2015
Q1 2014
Change in %
Sales
667.5
612.6
9
Gross profit
436.9
400.6
9
In % of sales
65.5
65.4
10 bp
(264.3)
(232.5)
(14)
(68.4)
(60.9)
(12)
(1.4)
1.5
>(100)
102.8
108.7
(5)
In % of sales
15.4
17.7
(230) bp
Financial result
(4.6)
(2.7)
(70)
Earnings before taxes
98.2
106.0
(7)
Income taxes
(22.6)
(24.4)
7
Net income
75.6
81.6
(7)
75.6
80.7
(6)
1.10
1.17
(6)
131.5
131.3
0
19.7
21.4
(170) bp
Selling and distribution expenses
Administration expenses
Other operating income and expenses
Operating result (EBIT)
■
Currency translation
effects impact operating
expense development
■
Retail and marketing
expenses grow at
double-digit rates
■
Special items and higher
depreciation charges
weigh on EBIT
■
Net financial result
impacted by negative
currency effects
Attributable to:
Equity holders of the parent company
Earnings per share (EUR)*
EBITDA before special items
In % of sales
*Basic and diluted earnings per share
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May 13, 2015
9
Currency translation effects distort regional profitability development
Segment profit
in EUR million
Q1 2015
in % of sales
Q1 2014
in % of sales
Change in %
Europe*
131.3
32.0
136.6
34.6
(4)
Americas
32.1
22.4
25.0
21.0
28
Asia/Pacific
31.2
31.0
26.5
30.7
18
Licenses
10.7
78.0
10.7
82.8
0
Segment profit operating segments
205.3
30.8
198.8
32.5
3
Corporate units/consolidation
(73.8)
EBITDA before special items
131.5
(67.5)
19.7
(9)
131.3
21.4
■
Margin decline in Europe due to adverse currency effects and higher selling and distribution
expenses
■
■
Margin improvement in the Americas due to positive currency translation effects
0
Positive currency effects in Asia/Pacific partly offset by higher retail expenses
*Incl. Middle East and Africa
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May 13, 2015
10
Increase of trade net working capital mainly due to higher inventories
539
+25%
Mar. 31, 2015
Inventories
(in EUR million)
Mar. 31, 2014
■
Expansion of retail
business
■
Slower than
expected sellthrough
■
Development in line
with wholesale
■
Ongoing effective
supplier
management
+12%
430
fx-adjusted
Trade
receivables
Mar. 31, 2015
(in EUR million)
Mar. 31, 2014
244
+6%
(3)%
231
fx-adjusted
Trade
payables
(in EUR million)
218
Mar. 31, 2015
+9%
+1%
200
Mar. 31, 2014
fx-adjusted
Trade net working capital up 23% to EUR 566 million, up 9% on a currency-adjusted basis
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May 13, 2015
11
Higher investments affect free cash flow development
Investments
Free cash flow
Net debt
(in EUR million)
(in EUR million)
(in EUR million)
+90%
+59%
40
43
(126)%
31
27
21
Q1 2015
Q1 2014
Q1 2015
Q1 2014
Mar. 31, 2014
Mar. 31, 2015
(8)
■
Increase primarily driven by
higher retail investments
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■
Decline due to lower profits
and higher investments
HUGO BOSS ©
■
Increase due to
negative free cash flow
development
May 13, 2015
12
Agenda
Financial Review First Quarter 2015
Strategic Outlook 2015
Financial Outlook 2015
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HUGO BOSS ©
May 13, 2015
13
Growth strategy 2020 defines 2015 priorities
Elevate the
BOSS core
brand by
engaging
consumers
emotionally
Leverage the
brand’s potential
in womenswear
and shoes &
accessories
Build
omnichannel to
drive own retail
online and offline
Exploit growth
opportunities in
underpenetrated
markets
Further build the Group’s operational strength to enable key strategy implementation
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HUGO BOSS ©
May 13, 2015
14
Increasingly differentiated portfolio to support BOSS brand elevation
WHOLESALE
PREMIUM
RETAIL
LUXURY
Future brand positioning
authentic
lighthearted
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innovative
dynamic
confident
sophisticated
HUGO BOSS ©
progressive
contemporary
May 13, 2015
15
HUGO and BOSS Green to replace BOSS in category business
RETAIL
WHOLESALE
Own stores to increasingly focus on BOSS core brand
exclusively
Presence of BOSS core brand to become limited to
shop-in-shops
Category business focused on HUGO and BOSS Green
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HUGO BOSS ©
May 13, 2015
16
Category migration one important lever to narrow global price gaps
■
Euro devaluation has widened global price
gaps most recently
■
BOSS brand elevation in Europe and the
Americas as well as collection upgrades in
China will narrow global price gaps
■
Further gradual refinements of global
pricing architecture to be implemented in
the medium- and long-term
BOSS Store Hong Kong, Canton Road
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HUGO BOSS ©
May 13, 2015
17
BOSS Womenswear maintains strong momentum
BOSS Womenswear sales up 11% currency-adjusted in the first quarter
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HUGO BOSS ©
May 13, 2015
18
Continuous expansion and upgrade of retail store portfolio
Number of own retail stores
as of March 31, 2015
TOTAL
Openings
(December 31, 2014: 1,041)
1,060 (+19)
49
thereof takeovers
28
Closings
Europe*
596 (+1)
Openings
thereof takeovers
Closings
Americas
201 (-3)
Openings
1
thereof takeovers
Closings
30
22
5
21
Asia/Pacific
263 (+21)
Openings
-
26
thereof takeovers
4
Closings
23
5
*Incl. Middle East and Africa
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May 13, 2015
19
Takeovers remain important part of retail expansion
South Korea
China
■
Key fashion and trend-setting market in
Southeast Asia
■
Takeover effective March 1, 2015
■
■
17 freestanding stores
■
Takeover of last remaining franchise
partner allows full brand control and
simplifies distribution structure
■
Takeover effective April 1, 2015
■
21 freestanding stores
Direct management of 6 duty free
stores to tap full potential of travel retail
business
Stronger brand presentation in Asia/Pacific to drive brand perception and sales
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May 13, 2015
20
Momentum in online business accelerates
Online sales up 14% currency-adjusted in the first quarter
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HUGO BOSS ©
May 13, 2015
21
Omnichannel model geared to the demands of today’s consumer
Phase 2: hugoboss.com
relaunch online and mobile
2014
Phase 1: Frontend
takeover
Phase 4: Completion of omnichannel implementation
2015
2016
Phase 3: Building the
digital flagship store
Implementation of omnichannel business model under way
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HUGO BOSS ©
May 13, 2015
22
Key digital initiatives defined
Initiative
Description and rationale
Status
Launch of own store
frontend
Takeover of Demandware software from former
fulfillment partner enabling full control
Done
Relaunch of
hugoboss.com
Migration of formerly separate eCom and brand Done
worlds driving traffic to store
Mobile store upgrade
Seamless integration of mobile store based on
responsive design
Done
Ongoing store
upgrades
Addition of new features to drive in-store
experience and usability
2015
myhugoboss.com /
“Mocca” POS system
Integrated customer database enabling storedriven CRM measures
2015
In-store online
ordering
iPad-based in-store ordering from significantly
wider online offering
2016
Order online,
exchange in store
Offering standardized and seamless return
process for maximum convenience
2016
Click & Collect
Order online, collect in-store
2016
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HUGO BOSS ©
May 13, 2015
23
Mixed regional outlook
Europe*
Americas
Asia/Pacific
■
Challenging market
environment persists
■
Promotional retail
environment continues
■
Good momentum in
Australia and Japan
■
Group outperforms
overall market
■
■
Improving retail execution
■
Chinese market
remains challenging
Upgrade of logistical
infrastructure
*Incl. Middle East and Africa
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May 13, 2015
24
New flat-packed goods distribution center operational since July 2014
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May 13, 2015
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Launch of new systems refines retail management
Purpose
Retail Merchandise Planning
Retail Assortment Planning
■ Systems-based planning process
■ SAP-based assortment planning
based on sales, margins and
stock levels
■ Detailed pre-season budgeting
Main operational
benefits
based on expected demand
■ Flexible in-season monitoring of
performance versus plan
■ Higher sales
Main financial
benefits
Timing of rollout
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approach based on store capacity,
location characteristics and
product lifecycles
■ Improved fit of merchandise
offering and product availability
■ Consumer-centric collection
development
■ Improved full-price sales
■ Lower inventories
■ Completion in 2015
HUGO BOSS ©
supporting margins
■ Higher inventory turns
■ Starting with Fall 2016 collection
development
May 13, 2015
26
Agenda
Financial Review First Quarter 2015
Strategic Outlook 2015
Financial Outlook 2015
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HUGO BOSS ©
May 13, 2015
27
2015 financial outlook reconfirmed
Outlook 2015
Sales growth (currency-adjusted)
Mid-single-digit rate
Growth of
EBITDA before special items
Capex
Own retail network
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5% - 7%
EUR 200 million – EUR 220 million
Around 50 openings (excl. takeovers)
HUGO BOSS ©
May 13, 2015
28
HUGO BOSS to be one of the winning brands in a tough environment
■
Apparel industry in tough competition
for share of consumer’s wallet
■
Maximization of emotional brand
appeal a key focus
■
Retail excellence and omnichannel to
increasingly differentiate HUGO BOSS
from competitors
BOSS Store Tokyo, Omotesando
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HUGO BOSS ©
May 13, 2015
29
BACKUP
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HUGO BOSS ©
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30
Brand portfolio
72%* of Group sales
8%* of Group sales
modern / sophisticated
modern / active
10%* of Group sales
10%* of Group sales
casual / urban chic
progressive / contemporary
*as of FY 2014
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HUGO BOSS ©
May 13, 2015
31
Sales by region 2014
Share of Group sales*
14%
Asia/Pacific
Europe
(incl. Middle East and Africa)
23%
61%
Americas
*+2% Licenses
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HUGO BOSS ©
May 13, 2015
32
Sales by distribution channel
44%
41%
57%
53%
49%
49%
54%
57%
40%
45%
3%
3%
2%
2%
2%
2%
2009
2010
2011
2012
2013
2014
64%
Wholesale
Retail
33%
Licenses
Retail to account for at least 75% of Group sales by 2020
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HUGO BOSS ©
May 13, 2015
33
Retail comp stores sales growth
Retail l-f-l
Sales growth retail l-f-l*
12
11%
10
8
6%
6
5%
4%
4
4%
4%
4%
3%
4%
3%
3%
FY
2014
Q1
2015
2
2%
2%
2%
Q1
2013
Q2
2013
0%
2%
0
Q1
2012
Q2
2012
Q3
2012
Q4
2012
FY
2012
Q3
2013
Q4
2013
FY
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
*fx-adjusted
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HUGO BOSS ©
May 13, 2015
34
Income statement
in EUR million
Q1 2015
Q1 2014
Change in %
2014
2013
Change in %
667.5
612.6
9
2,571.6
2,432.1
6
Cost of sales
(230.6)
(212.0)
(9)
(872.5)
(852.5)
(2)
Gross profit
436.9
400.6
9
1,699.1
1,579.6
8
In % of sales
65.5
65.4
10 bp
66.1
64.9
120 bp
(264.3)
(232.5)
(14)
(994.9)
(891.6)
(12)
(68.4)
(60.9)
(12)
(236.2)
(228.5)
(3)
(1.4)
1.5
>(100)
(19.3)
(3.3)
>(100)
Sales
Selling and distribution expenses
Administration expenses
Other operating income and expenses
Operating result (EBIT)
102.8
108.7
(5)
448.7
456.2
(2)
In % of sales
15.4
17.7
(230) bp
17.4
18.7
(130) bp
Net interest income/expense
(0.9)
(0.6)
(50)
(4.5)
(14.4)
69
Other financial items
(3.7)
(2.1)
(76)
(7.1)
(8.3)
14
Financial result
(4.6)
(2.7)
(70)
(11.6)
(22.7)
49
Earnings before taxes
98.2
106.0
(7)
437.1
433.5
1
Income taxes
(22.6)
(24.4)
7
(102.6)
(100.1)
(2)
Net income
75.6
81.6
(7)
334.5
333.4
0
Attributable to:
Equity holders of the parent company
75.6
80.7
(6)
333.3
329.0
1
Non-controlling interests
0.0
0.9
(99)
1.2
4.4
(73)
Earnings per share (EUR)*
1.10
1.17
(6)
4.83
4.77
1
131.5
19.7
131.3
21.4
0
(170) bp
590.8
23.0
564.7
23.2
5
(20) bp
(1.4)
1.5
>(100)
(19.3)
(3.3)
>(100)
EBITDA before special items
In % of sales
Special items
*Basic and diluted earnings per share
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HUGO BOSS ©
May 13, 2015
35
5-Year Overview
in EUR million
Earnings Position
Sales
Gross profit
EBITDA
EBITDA before special items
EBIT
Net income attributable to equity
holders of the parent company
Financial Position and Dividend
Free cash flow
Net debt
Capital expenditures
Depreciation/amortization
Dividend*
Asset and Liability Structure
Total assets
Shareholders' equity
Trade net working capital
Non-current assets
Key Ratios
Gross profit margin in %
Adjusted EBITDA margin in %**
Total leverage***
Equity ratio in %
2014
2013
2012
2011
2010
2,571.6
1,699.1
571.5
590.8
448.7
2,432.1
1,579.6
561.4
564.7
456.2
2,345.9
1,444.1
523.9
528.1
432.0
2,058.8
1,252.0
468.0
469.5
394.6
1,729.4
1,022.4
340.1
353.7
267.9
333.3
329.0
306.5
284.9
188.9
268.4
35.7
134.7
122.8
249.8
230.0
57.0
185.3
105.3
230.5
220.6
130.4
165.8
91.9
215.3
194.9
149.1
108.5
73.4
199.1
246.3
201.1
55.6
72.2
139.7
1,661.8
843.9
503.0
660.3
1,501.3
740.3
431.8
611.5
1,577.2
631.6
408.5
587.7
1,419.6
517.3
399.6
503.2
1,342.8
361.2
322.7
454.5
66.1
23.0
0.1
50.8
64.9
23.2
0.1
49.3
61.6
22.5
0.2
40.0
60.8
22.8
0.3
36.4
59.1
20.5
0.6
26.9
* Based on dividend proposal
**EBITDA before special items/Sales
***Net financial liabilities/EBITDA before special items and expenses for the stock appreciation rights program
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May 13, 2015
36
EBITDA margin and ROCE vs. channel mix
Adj. EBITDA margin
ROCE
Retail
Wholesale
Royalties
24%
57%
73%
64%
62%
22.8%
22.5%
63%
60%
49%
33%
31%
16.7%
3%
15.7%
2006
31%
31%
41%
23.2%
20.5%
23.0%
17.2%
16.1%
2%
2007
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2008
2009
2010
HUGO BOSS ©
2011
2012
2013
May 13, 2015
2014
37
Trade net working capital
Average trade net working capital as a
percentage of sales by quarter*
(in %)
22
20
+180 bp
20.1
20.6
20.7
19.8
19.7
18.6
18
18.0
17.9
17.9
18.1
18.7
19.1
19.7
16
14
12
10
8
6
4
2
0
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
*Certain amounts shown here do not correspond to the figures published in prior years and reflect adjustments made
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May 13, 2015
38
Adjusted financial leverage
2.4
2.2x
2.0
1.6x
1.6
1.4x
1.3x
1.2x
1.2x
1.3x
1.2
0.8
0.6x
0.3x
0.4
0.0
2009
2010
2011
0.2x
2012
0.1x
0.1x
2013
2014
Net debt / EBITDA
Net debt incl. operating leases / EBITDAR
Operating leases = Future committed operating lease obligations capitalized according to S&P methodology
EBITDAR = EBITDA + minimum rents + contingent rents
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May 13, 2015
39
Dividend and payout ratio
in EUR
4.00
in %*
100
3.62
3.34
3.50
3.12
75%
2.50
80
2.88
3.00
64%
2.00
70%
70%
70%
75%
70
60
2.02
50
40
1.50
1.00
90
30
0.96
20
0.50
10
0.00
0
2009
2010
2011
2012
2013
2014**
Proposal in line with dividend policy of 60% to 80% payout of consolidated net profit
*As a percentage of net profit attributable to the shareholders of the parent company // **2014: Dividend proposal
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May 13, 2015
40
Sourcing and production structure 2014
5%
North Africa
4%
Americas
20% own
production*
11% Western
Europe
33%
Asia
47%
Eastern Europe
80% third
party production*
*Percentage based on procurement volumes
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May 13, 2015
41
Retail network
Number of own retail stores
+ 26
+ 22
+1
+ 6 France
+ 6 Spain
+ 4 Germany
+ 3 Russia
+ 2 Italy
+ 1 Greece
Dec 31, 2014
Europe*
1,060
+ 24 Korea
+ 1 Australia
+ 1 China
+ 1 USA
1,041
(30)
Americas
Asia/Pacific
Closings
Mar 31, 2015
*Europe incl. Middle East and Africa
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HUGO BOSS ©
May 13, 2015
42
Shareholder structure*
7%
PFC S.r.l. / Zignago Holding S.p.A.
(Marzotto family)
2%
Own shares
91%
Free float
*Based on ad-hoc announcement dated March 16, 2015
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May 13, 2015
43
Financial calendar 2015
Date
Event
May 12, 2015
Annual Shareholders’ Meeting
August 4, 2015
First Half Year Results
November 3, 2015
Nine Months Results
November 24, 2015
Investor Day
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May 13, 2015
44
Investor Relations contact
Dennis Weber, CFA
Head of Investor Relations
Dr. Kay Hofmann
Investor Relations Manager
Phone: +49 (0) 7123 94 - 86267
E-Mail: [email protected]
Internet: group.hugoboss.com
Phone: +49 (0) 7123 94 - 87581
E-Mail: [email protected]
Internet: group.hugoboss.com
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May 13, 2015
45
Forward looking statements contain risks
This document contains forward-looking statements that reflect management's current
views with respect to future events. The words "anticipate ", "assume ", "believe",
"estimate", "expect", "intend", "may", "plan", "project", "should", and similar expressions
identify forward-looking statements. Such statements are subject to risks and
uncertainties. If any of these or other risks and uncertainties occur, or if the assumptions
underlying any of these statements prove incorrect, then actual results may be materially
different from those expressed or implied by such statements. We do not intend or assume
any obligation to update any forward-looking statement, which speaks only as of the date
on which it is made.
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May 13, 2015
46